The Palestinian Authority is doling out millions of dollars in cash grants to convicted terrorists recently released from Israeli prisons in a program announced the same day as the P.A. accepted $148 million in the latest round of U.S. aid.

The authority announced Aug. 18 it would disburse $15 million in so-called “Dignified Life Grants” to more than 5,000 prisoners who had served more than five years in Israeli lockups, but had been recently released as a show of good faith by the Jewish state to bolster the Middle East peace process, according to Palestinian Media Watch.

The announcement came on the same day the State Department’s Michael Ratney, consulate general of the U.S. in Jerusalem, signed off on $148 million in aid to the cash-strapped Palestinian Authority, currently in the throes of a budget crisis.

Although the U.S. funnels about $400 million per year in aid to the authority, none of the money, by law, is supposed to go to terrorists or former terrorists. Critics say there is no way to separate money from U.S. taxpayers and the funds which go to the former prisoners.

“We have a lot of funding that goes to the PA that is fungible and co-mingled and there is a lot of concern the money is going to radical causes and extremist issues,” Jonathan Schanzer, vice president for research at the bipartisan think tank, Foundation for Defense of Democracy, told FoxNews.com.

“There are many problematic questions concerning the way the Palestinian Authority disperses funds and especially those coming from the U.S. This is not unique. We’ve seen in the past, monies allocated from the PA’s budget to the al-Aqsa Martyrs’ Brigade, which is a designated terrorist organization, and all of this points to a troubling trend whereby the U.S. has tried to get a handle on financing within the P.A.”

In August, The Associated Press reported that Israel published the names of 26 men to be freed before the latest peace talks between the Jewish State and the P.A. In all, 104 prisoners have been slated for release in four phases over a period of nine months that the U.S. has set aside for negotiations. But their freedom is reportedly contingent on progress in the talks.

It’s not clear who exactly has applied for the “Dignified Life Grants,” although Palestinian Media Watch reports that prisoners released from Israeli prisons swarmed the P.A.’s Ministry of Prisoners' Affairs office in Gaza following the grants’ announcement.

And among those Israel was slated to release was Mustafa al-Haj, convicted of killing an American-born settler hiking in the West Bank in 1989.

“It’s not certain our specific dollars are finding their way into terrorists’ or former terrorists’ pockets but - at the least - it’s freeing funds for the P.A. to do these types of things,” Jim Phillips, Middle East analyst at the Heritage Foundation, a Washington, D.C.-based conservative think tank, told FoxNews.com.

“The Palestinians will argue this money is not fungible, but the fact that they are making these grants is a sign to me that the P.A. has plenty of money and maybe the U.S. should be scaling back its aid to the organization.”

Andrea Lafferty, president of the Traditional Values Coalition, a national conservative organization, turned up the rhetorical heat a few degrees further, telling FoxNews.com, “The Israelis were wrong to release these murderers and Obama is wrong to pay them a bonus for their evil actions. No good can come with any cooperation with the Palestinian Authority.

“These are repeat, serial terrorists and murderers that we have been funding. And The more we learn about the twisted foreign policy of the Obama Administration, the better we understand why the president is so inept to handle any issue foreign or domestic.”